Congress May Throw Social Security Disability Insurance a Lifeline

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Despite their differences, some House Republicans and Democrats were singing from the same hymnal on Thursday in an effort to save the social Security Disability Insurance fund from tanking next year.

President Obama’s plan to shift $330 billion in Social Security retirement funds around to avert a huge shortfall in the disability insurance program met with stiff resistance from Senate Republicans a week ago during congressional deliberations over the president’s $4 trillion fiscal 2016 budget. Earlier today, however, a senior House Democrat voiced optimism that the two sides might be able to reach agreement to prevent exhaustion of the Social Security disability insurance trust fund next year, according to a report by CQ Roll Call.

Rep. Xavier Becerra, the ranking Democrat on the Ways and Means Social Security subcommittee, said, “I think all of us want to make sure that Americans who paid into this system are able to go ahead and get their benefits, whether disabled or retired… I think pretty much every one of us at this table said let’s figure out a way to sit down and do this.”

At a time when the White House and congressional Republicans are battling over immigration policy and whether to fully fund the Department of Homeland Security before temporary funding expires midnight Friday, today’s exchange over the disability insurance program vital to millions of people was a refreshing change of pace. Becerra speaks with authority for the Democrats because of his years working on Social Security issues and because he also chairs the House Democratic caucus.

Rep. Sam Johnson (R-TX), the chair of the subcommittee, opened the hearing by highlighting what he described as the Republicans’ commitment to keeping the disability insurance fund solvent and to protect disabled Americans from the threat of a 20 percent reduction in their benefits –a cut that will be imposed unless Congress can solve the funding mess. He added that the committee would work to improve the program and find ways to help get recipients back to work.

The latest Social Security trustees’ report projects the fund’s reserves will be depleted in late 2016. By law, Social Security can only pay benefits if there is a positive balance in the appropriate revenues in two funds, for old age and survivors’ benefits (OASI), and for disability benefits (SSDI).

The key provision of the Obama plan would shore up the SSDI Trust Fund with the substantial income transfer.Currently, employers and their workers each pay a total of 6.2 percent of their wages to the Social Security system – 0.9 percent is allocated to SSDI and 5.3 percent to OASI.

Under Obama’s approach, neither the overall tax rate nor the solvency of the combined trust funds would be affected. Instead, the plan would reallocate a few tenths of a percentage point of payroll tax revenue from the OASI fund to the SSDI fund, so that both trust funds would be sustained until 2033.

Without those reserves, the only funds the government can use to cover disability claims is incoming tax revenue. Yet there would only be enough to cover 81 percent of scheduled disability benefits.

House Republicans recently passed a rule that would require any shift of funds to the disability program to be paired with reforms designed to bolster the program. Democrats and the administration opposed that rule change, fearing that it might lead to onerous new work requirements for the disabled.

Becerra favors what Democrats call a “clean” reallocation of tax revenue from the old age and survivors fund to the disability fund to prevent cuts in disability insurance. But the California Democrat did not rule out a reallocation that would be coupled with other changes to Social Security.

“I wouldn’t want to use the need for a rebalancing as an excuse to do harm to the program,” Becerra told reporters after the hearing, according to CQ Roll Call. “But to the degree that, as you saw the spirit here, to advance a proposal for Social Security that keeps it strong and vibrant for years to come, that’s great.”

“Maybe we’ll have an opportunity to do some big things in Social Security. And I think, bi-partisanly, people would agree that we need to do big things for Social Security,” Becerra added.

Ed Lorenzen, senior adviser to the Committee for a Responsible Federal Budget, a spending and tax watchdog group, said the depletion of the disability fund should be an impetus for comprehensive Social Security reform that addresses solvency of both programs.

Short of that, he said, “Legislation temporarily shoring up the DI trust fund should be accompanied by changes to produce saving in both OASI and DI as well as reforms and pilot projects to improve the DI program,” Lorenzen said.

“For example, policymakers could set a goal of including enough savings in the OASI program to offset the impact of reallocation on the 75-year balance of the OASI trust fund and make a down payment on improving DI solvency,” he added.

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.